Securities and Appellate Tribunal left with 2 members, one short of quorum

The Securities and Appellate Tribunal (SAT) is lacking a quorum to pass orders, following retirement of a member.

The tribunal has two members—presiding officer J P Devadhar and C K G Nair— after the retirement of Jog Singh on February 19. Rules require a three-member panel to hear appeals on orders passed by regulatory bodies. According to sources, the new appointment would take four to six months.

Apart from the Securities and Exchange Board of India (Sebi), the tribunal also hears cases against orders issued by the Insurance Regulatory and Development Authority of India and the Pension Fund Regulatory and Development Authority.

If one of the two remaining members goes on leave or recuses from hearing a particular matter, citing conflict of interest, the bench would not able to even sit and function, say legal experts.

“The government should streamline the appointment procedure. There should be time-bound clearance of appointment for the selected candidate from the ministry and investigative agencies. They should start an appointment process well before. With the Lok Sabha election round the corner, such appointments could get further delayed,” said H P Ranina, senior corporate lawyer.

During 2016-17, as many as 470 appeals came before the tribunal. Further, 185 appeals were dismissed (ruled in favour of Sebi), while seven were allowed (ruled against Sebi). As of March 31, 2017, 411 appeals were pending with SAT.

In urgent matters, the tribunal has been passing temporary rulings, subject to review by a new bench. For instance, on February 16, SAT allowed Price Waterhouse to continue servicing existing clients until March 2019. It also said a new bench could review this relaxation, since the bench was set to be reconstituted. Hence, the matter will be further heard by the new bench.

“It is important to address this issue, to maintain the standard of the tribunal. The ministry of finance should look into the matter and fast track the appointment. Orders passed by SAT can only be appealed before the Supreme. Therefore it is critical that the orders passed are of high-quality, at par with any high court,” said another lawyer.

In his 2015-16 Budget speech, finance minister Arun Jaitley had announced there would be new benches and new members at SAT. It has been over three years and no new benches have been notified.

Appointment of a SAT member is done by the Appointments Committee of the Cabinet (ACC), which has representation from the Reserve Bank of India and the finance ministry. SAT’s presiding officer is also part of ACC. A SAT member is appointed on contract for five years or till the age of 62 years, whichever is earlier.